Majority of Swiss Polled Back SNB Currency Operations, SZ Says

Aug. 21 (Bloomberg) -- A majority of Swiss support moves by
the country’s central bank to curb the rise of the franc,
SonntagsZeitung reported, citing a poll by market research
company Isopublic AG.

Of 1,004 people questioned Aug. 18-20, 63 percent favored
action by the Swiss National Bank to halt the currency’s rise
even if it leads to a rise in inflation, the newspaper said.
More than one out of four, or 27 percent, said the central bank
should set an exchange-rate target. The newspaper didn’t provide
any margin of error for the survey.

Swiss lawmakers, facing elections in October, have become
increasingly concerned that the franc’s 17 percent gain against
the euro over the past 12 months will erode exports and hinder
growth. Consumers became more pessimistic about the economic
outlook and job prospects in July, investor confidence slumped,
and Finance Minister Eveline Widmer-Schlumpf on Aug. 17 said the
government supports “any measure against the strong franc
deemed appropriate by the SNB.”

Goldman Sachs Group Inc. said in an e-mailed note on Aug. 5
that it cut its Swiss economic-growth forecasts to 1.9 percent
from 2.1 percent for this year and to 0.6 percent from 2 percent
for 2012.

The central bank, which earlier this month cut borrowing
costs to zero and increased bank sight deposits almost
sevenfold, left the door open for additional measures to stem
the franc’s record-breaking rally. SNB governing board member
Thomas Jordan on Aug. 11 said in an interview that the central
bank is assessing several options to prevent the franc from
appreciating.

Exchange Target

The Swiss cabinet expects the SNB to set an exchange-rate
target of at least 1.20 francs per euro, SonntagsZeitung also
reported today, without saying where it obtained the
information.

SNB spokesman Walter Meier declined to comment on the
newspaper’s report in response to a request from Bloomberg News.
Andre Simonazzi, a spokesman for the government, didn’t
immediately respond to a phone call.

The Swiss National Bank came under criticism after it
quadrupled its foreign currency holdings as a result of
intervening in currency markets over 15 months to June 2010 and
suffered a full-year loss of $21 billion after the euro slumped.

“We expect more effective steps very soon, especially
interventions in the foreign exchange market,” Ulrich
Leuchtmann, head of currency strategy at Commerzbank AG in
Frankfurt, wrote in a note on Aug. 18. The SNB’s latest measures
have been “disappointing,” he said.

The franc closed at 1.1303 versus the euro yesterday in
Zurich after reaching a record 1.0075 on Aug. 9, reflecting
investor concern that the euro-area fiscal crisis may worsen.
Against the dollar, the franc closed at 78.51 centimes.